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Globalization

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					Globalization
Chapter No # 02
Globalization
“ It refers to the shift towards a more integrated and
  interdependent world economy”

“As if the entire world (or major regions of it) were a
  single entity; [such an organization] sells the same things
  in the same way everywhere”
               Globalization
 Because of globalization, for the first time in
  history, the availability of international products and
  services can be accessed by individuals in many
  countries, from diverse economic backgrounds.
Two Types of Globalization

 Globalization of Markets


 Globalization of Production
Globalization of Markets
 There is a movement towards a globalization of markets,
  as the tastes and preferences of consumers in different
  nations are beginning to converge upon some global
  norm
Globalization of Production
 There is a movement towards a globalization of production,
  as firms disperse parts of their production processes to
  different locations around the globe to take advantage of
  national differences in the cost and quality of factors of
  production.
Drivers of globalization:
 Decline of barriers to trade and investment


 Technological change
Globalization Forces

 Political forces
   Reduction of barriers to trade and foreign investment by
    governments
   Privatization of former communist nations




 Technological forces
   Advances in computers and communications technology

   Internet and network computing
Globalization Forces                   , cont’d.

 Market forces
   Globalizing companies become global customers


 Cost forces
   Goal for economies of scale to reduce unit costs




 Competitive forces
   Increase in intensity due to explosive growth in international
    business
Explosive Growth
 Foreign Direct Investment and Exporting
   FDI - Direct investment in equipment, structures, and
    organizations in a foreign country


   Exporting – transportation of any domestic good/service to a
    destination outside a country or region
Explosive Growth
 Foreign Direct Investment and Exporting
   FDI - Direct investment in equipment, structures, and
    organizations in a foreign country


   Exporting – transportation of any domestic good/service to a
    destination outside a country or region
Globalization: Countervailing forces
 Globally Standardized versus Nationally
 Responsive Practices

 Country versus Company Competitiveness


 Sovereign versus Cross-National Relationships




 Ethical dilemmas and social responsibility
The Globalization debate: prosperity or
 impoverishment?

Globalization stimulates economic growth, raises
 the incomes of consumers, and helps to create
 jobs in all countries that choose to participate in
 the global economy.

“sweatshop” jobs, increases pollution, and draws
  people from the countryside into ever more
  crowded cities and slums, loss of good paying
  jobs to low wage countries.
Advantages and challenges of
globalization
 Productivity
 Consumers
 Employment
 The Environment:
 Monetary and Fiscal Conditions:
 Sovereignty
Productivity
 Productivity is improved by producing in countries where
  production is most efficient. However, this often means
  workers in one country lose jobs as their work moves to
  more efficient locations.
Consumers
 Consumers benefit from a wider array of competitively
  priced goods. However, they have less control over supplies
  coming from abroad than over goods produced domestically
Employment
 Employment may increase as economic growth and
  specialization take hold. However, domestic employment
  fluctuates according to foreign conditions (such as economic
  crises elsewhere that reduce demand for domestically
  produced goods).
The Environment:
 As global consumption increases due to globalization, more
  natural resources deplete. Differing environmental standards
  across countries create opportunities for businesses to
  exploit resources in countries with the least amount of
  environmental protection regulation
Monetary and Fiscal Conditions
 As money moves more freely, it is better able to seek out the
  best investment opportunities on a global scale. However,
  governments have less control over the inflow and outflow of
  funds. Furthermore, capital seems to be flowing more freely
  to countries with lower tax rates and less regulatory
  restrictions, putting additional pressures on national fiscal
  and monetary policies
Sovereignty
 Globalization may undermine national sovereignty in two
  ways: First, contact with other countries creates more
  cultural borrowing and may dilute a country's cultural
  uniqueness. Second, countries are concerned that important
  decisions may be made abroad by foreign owners of
  domestically located firms.

				
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posted:3/10/2012
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